The Standard Bank has been organising agribusiness forums since 2021 – they’re already in their fourth edition – as a mechanism for finding solutions to the sector’s challenges. What has been the role of these forums and the institution’s positioning? This is what João Guirengane, Head of Commercial and Business Banking, explains to us.
The agribusiness sector occupies a prominent place in the Mozambican economy. There is enormous potential in the agricultural sector, but there are still challenges to be overcome, the most glaring of which are poor logistical infrastructure, poor integration of value chains and the low level of productivity in the sector in general. Based on this realisation, Standard Bank is taking a holistic approach to offering financial solutions to this sector, which includes holding forums bringing together the main players in the agricultural industry. How does this work and what results can be expected?
Who is the target audience for the agribusiness forums organised by Standard Bank?
These forums are aimed at all players in the agribusiness value chain, including product and service suppliers, small farmers, producers, production aggregators, processors, logistics operators, traders, inspection and certification companies, domestic and international marketing and distribution companies, among other entities.
Agribusiness is a structuring sector for the present and future of the national economy. How does Standard Bank see it and how is this reflected in your service offering?
Standard Bank recognises the structuring role of agribusiness in the national economy and, in line with this potential, has organised reflection sessions on the development of this sector, particularly on increasing competitiveness and resilience and also on growth opportunities. Standard Bank takes a holistic approach to offering products and services to the agribusiness sector, in order to help the country move from a subsistence agricultural economy to commercial agriculture, by banking the sector as a whole. This includes providing services tailored to the needs of the various operators in the value chain, so that they can transform and grow their businesses in a sustainable way. Standard Bank offers a range of financial solutions that facilitate domestic and foreign trade, including loans, documentary credit, leasing and insurance.
From a more macro perspective, what is the bank’s strategy towards agribusiness?
Agribusiness is one of the sectors of the economy that can best leverage broad-based economic development, stimulating the acceleration of GDP growth, the creation of more jobs, food security, containing inflation, balancing the trade balance and having a positive impact on the development of the country’s logistics infrastructure. In recognition of this important role and the multiplier effect that the sector plays in the economy, the bank is positioning itself as a growth partner for the agribusiness sector.
SMEs are at the centre of this segment. What is the bank’s strategy for this business universe?
SMEs make up the vast majority of Mozambique’s agri-business fabric, so they can in no way be neglected. Aware of this fact, the bank’s main strategy is to exploit business ecosystems that include, for example, the intrinsic business links between large companies and SMEs, reflecting the interdependent relationship between both business segments. Standard Bank was the first bank on the market to create a business incubator with the aim of leveraging startups and SMEs, including those in the agribusiness sector, through which the bank helps structure business ideas that have an impact on the community and helps solve everyday problems in a simple and creative way.
“The bank is already an important player in financing the sector, with strong credit exposure to relevant agricultural sub-sectors in the country,” João Guirengane.
Are there any other events of this kind on the agenda for the rest of the year?
We plan to hold another agribusiness forum this year. After the event on 27 and 28 June in Chimoio, the bank is currently making an assessment to decide where and when exactly the next one will be.
The question of financing: how can the bank position itself as a player in the development of the agricultural sector?
The bank is already an important player in financing the sector, with strong credit exposure to the country’s important agricultural sub-sectors such as tobacco, maize, sugar and bananas. This financing is granted to borrowers along the various value chains, including traders, logistics operators, processors, producers (such as outgrowers) and suppliers of commercially interconnected products and services. We have the example of the interconnection between a sugar company and its outgrowers who produce cane for the sugar company. Having said that, it is still a challenge for commercial banks to finance the sector given the inherent risks and uncertainties. However, the bank’s specialised knowledge and experience in structuring credit proposals for the sector helps to keep Standard Bank a leader in agribusiness financing in the country.
Another topic that is certainly debated in these forums is the issue of promoting agricultural exports: this touches on the issue of quality, infrastructure, energy, technology, all themes and areas that the bank is focusing on.
That’s right. At the last forum in Manica and at the second forum held in the middle of last year in Nampula, discussions were very much centred on export promotion. These are all factors that have an impact on the ability of Mozambique’s products to penetrate and compete in foreign markets with other countries. The reflections we have had in these forums and the bank’s experience suggest that building competitiveness in international trade is an ongoing process that goes far beyond whether or not the country’s products are competitive from a cost-price perspective. There are many other factors, such as quality in line with internationally accepted standards, the ability to supply with the regularity required by the market, traceability of the product from its origin and much more. More recently, factors such as the compatibility of production processes with environmental and social goals have also begun to weigh into the question of competitiveness associated with exports to certain more demanding markets. Also to promote the export of agricultural products and access to new markets, the bank has facilitated the entry of Mozambican companies into the Chinese market. Recently, Standard Bank took some companies operating in the agricultural sector to two trade fairs in China, namely the China International Import Expo and the China Africa Economic and Trade Expo.
As Standard is a bank closely associated with investment and relations with external investment partners, what kind of added value can this kind of initiative bring? How can you bridge the gap between the sector and the main investors and investment partners in the country?
Typically, investors and potential investors base their decisions, among other factors, on concrete market information to gauge the viability and level of return on their investment. From this perspective, this type of initiative supports the identification and publicising of investment opportunities, supports the mapping and linking of investors with other entities (product and service providers, business partners) and serves as a channel for networking between investors. Standard Bank is a bank with a presence in various financial centres in Africa and beyond, i.e. with a vast communication network that serves to publicise and promote investment opportunities in agribusiness in the country and beyond.
What is Standard Bank’s assessment of the three agribusiness forums that have already taken place?
The balance is positive. With each forum we’ve held, we’ve seen a greater awareness of the objectives and interest from the target audience, through increasing active participation. On the other hand, the event has managed to fulfil its purpose of connecting all the players in the agricultural industry, whether they are small or large companies, producers or service providers, from the private or public sector. An example of this is the fact that the last edition, held on 27 and 28 June in Chimoio, saw the participation of companies based in provinces as far away as Maputo, for example. And representatives of small-scale producers also took part. At this latest forum in Chimoio, we also had the participation of representatives of the sector from neighbouring countries, namely Zimbabwe and South Africa, which is a great gain, as one of the objectives is to link all the members of the value chain also from the perspective of the African free trade area – which Mozambique recently ratified, promoting greater investment, more resilience and greater competitiveness.